SALT LAKE CITY -- A mindless, "herd mentality" that permeates the stock market may be setting up another financial crisis here in the United States, as signals point to a build-up, sell-off scenario, said economist Walter Zimmermann at the opening session of CSP's Outlook Leadership 2012 conference in Salt Lake City this week.

Accompanied by two retailers who have developed strategic directions based in part on Zimmermann's forecasts, the chief technical analyst for United I-CAP, New York, warned the estimated 800 attendees that signs of a bullish enthusiasm among investors has historically signaled a dramatic fall.

"Looking at the New York Stock Exchange, it seems they're all bullish, they're all-in again," Zimmermann said, noting that historically the Olympic Games ignite a euphoria that affects the markets.

The herding phenomenon shows itself most vividly in how prices for gold, gasoline, copper and any number of basic commodities have all begun to merge into similar patterns, as if in lock step. "If you see stock prices go up, fifteen minutes later, the price of gasoline goes up," Zimmermann said. That kind of volatility and rollercoaster highs and lows works against the kind of confidence that fosters new investment and consumer spending, he said.

For Scott Hartman, president of Rutter's Farm Stores, York, Pa., Zimmermann's forecasts from before the recession of 2008-2009 encouraged him to not only seek the economist's ongoing advice, but to slow down his company's new-build plans and instead, stockpile cash, preparing for scenarios of not only flat growth but 10% to 15% drops in sales.

"Preparing your balance sheet is key," Hartman told the group. "Cash is king and too much debt is a problem."

Deflation forces retailers to review their assets, Hartman said, which lead his chain to slow land acquisitions and renegotiate loan durations.

On the other hand, retailer Greg Parker, president of Parker Cos., Savannah, Ga., opted to take advantage of lower real-estate prices, cheaper building costs and favorable interest rates to secure new funding. "Bet the dollar long and build, build, build," said the 20-plus store retailer. Parker has built six new locations in the past 15 months, has two more coming on line and plans for 17 more in the near future.

"Let's not let the tail wag the dog," Parker said. "The strong companies are out there building."

Hand-in-hand with chain expansion is the need to build rapport with customers, Parker said, describing the kinds of community initiatives and charity work his company does. Zimmermann agreed with the strategy. "Consumers are hurting," he said. "Income is not up. There's no job security. Any program where you're giving back will win people over and gain that stickiness you want in a customer."